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Home Affordability At Its Highest in Nearly Two Decades

By Mike Wheatley | November 21, 2011

The combination of stabilizing home prices and super-low interest rates has led to housing becoming more affordable now than it has been at any time over the last two decades, according to a press release by the National Association of Home Builders.

Home affordability index

Homes are more affordable now than they have been in two decades. Now if only we could obtain some credit... © Galina Barskaya -

The latest NAHB/Wells Fargo Housing Opportunity Index (HOI) showed that 72.9 % of homes sold over the last quarter, were affordable for families that earned an income of at least $64,000, which is the present national median income. This is the eleventh successive quarter in which this housing affordability measure has scored over 70%. In previous years, the measure rarely scored over 60%, showing just how far housing affordability has come in the last few years.

However, just because homes are affordable, doesn’t mean that everyone can take advantage of the fact. Bob Nielsen, chairman of the NAHB, was quoted as saying that although housing affordability is at its highest level in 20 years, the difficulty in obtaining credit remained one of the biggest stumbling blocks to people looking to buy a home:

“Tough economic conditions — particularly in markets that experienced major changes in house prices and production — as well as extremely tight credit conditions confronting home buyers and builders continue to remain significant obstacles to many potential home sales."

But for those lucky few who do have the means to obtain credit or buy a property outright, the pickings now are exceedingly rich. Take the Lakeland-Winter Haven, Fla., area, where a nationwide high 92.5% of all homes sold in the last quarter were said to be affordable to those households earning at least $53,800, the median annual income for that area.

Other major markets in which homes are extremely affordable right now included Indianapolis-Carmel, Ind.; Toledo, Ohio; Youngstown-Warren-Boardman, Ohio-Pa.; and Ogden-Clearfield, Utah.

And it’s not just larger markets where homes are becoming more affordable – some smaller markets have seen an astonishingly high number of affordable property sales over the last quarter, such as Fairbanks, Alaska, which led the nation with 97.8% of all homes sold being rated affordable for those earning the state’s median annual income of $91,700.

It’s not all easy pickings though, as some areas are still proving to be completely unaffordable. New York-White Plains-Wayne, N.Y.-N.J., led the nation in having the least number of affordable home sales, at just 23.3%.

Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
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